Good morning! It’s Monday, December 8, 2025 and it’s The Morning Shift, your daily roundup of the top automotive headlines from around the world, all in one place. Here you’ll find the most important stories shaping the way Americans drive and get around.
In reports this morning, Donald Trump’s ill-advised tariffs are finally starting to impact new car prices; Canada may be pulling aid from Stellantis after the company said it would move production to the U.S.; Volkswagen is cutting future investment plans because it’s a little strapped for cash, and the Chinese auto market is currently in a serious funk.
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Gear One: Car prices go up because of Trump
Ford Mustang Mach-E vehicles will be available at dealerships in Austin, Texas on June 24, 2025. – Brandon Bell/Getty Images
It took a while, but U.S. customers now appear to be seeing the impact of President Donald Trump’s sweeping tariffs on the auto industry. It seems like many automakers wait until model year transitions to start really raising prices.
A recent analysis by Cloud Theory, which tracks vehicle inventory on dealer websites across the country, found that OEMs are implementing more aggressive increases for 2026 MY vehicles compared to dealers showing 2025 models last year. Its data shows that the average market price increase for 2026 models is close to US$2,000. When you compare that to the roughly $400 increase when replacing a 2025 model, the difference is huge. Additionally, 23 models will see price increases of at least $2,000 through 2026. This number is up from nine last year. From the Detroit News:
Any increase comes at a time when average car prices are already hovering around $50,000. Combined with high interest rates, the average monthly car payment is now $766, up more than 3% from a year ago, according to Edmunds.com Inc. This fall, a record share of subprime borrowers defaulted on their auto loans.
However, significant tariff-related increases in vehicle sticker prices — analysts initially warned they could see an additional $5,000 to $15,000 per vehicle — have yet to materialize.
Reasons include competitive pressure among rival automakers, concerns about Trump’s counterattack, large inventories of cars before the tariffs that gave companies some lag time before they need to adjust prices, and policy changes to lessen the pain of the tariffs themselves.
Automakers have chosen to absorb many of the additional costs in the short term.
Destination charges on new vehicles are also rising, an area where automakers are clearly trying to recoup some of the damage caused by Trump’s policies.
Another slightly drastic step some OEMs are taking is making their cars less satisfying. detroit news Claims are that some companies are removing features from certain models to cut costs while keeping list prices the same. Tightening inflation and capitalization have hit the auto industry.
At the very least, a big price increase of 10% or 15% is almost certainly not going to happen – at least not at the same time. However, I wouldn’t be surprised if a boiling-the-frog situation occurs here. If you raise the price a few bucks a year, maybe people won’t notice.
Tier 2: Canada may stop aid to Strantis
Stellantis Windsor Assembly Plant on display on April 1, 2025 in Windsor, Canada. – Bill Pugliano/Getty Images
Canada is at loggerheads with Stellantis over its failure to fulfill its promise to build new Jeep vehicles in the country. Back in October, the automaker announced massive investments in its U.S. manufacturing operations to circumvent President Trump’s 25% tariff on imported cars. Eventually, it will bring several vehicles back to U.S. manufacturing facilities for production, including the new Jeep Compass.
It will be built in Belvedere, Illinois. Crucially, this isn’t Brampton, Ont., where the company previously promised Unifor, the Canadian automaker’s union, to build the plant as part of a 2023 collective bargaining agreement. Unifor President Lana Payne described Stellantis’ decision as a “betrayal.” Now, the relationship between the state and the company has turned sour. from detroit free press:
On Dec. 4, Canada’s Industry Minister Mélanie Joly said the Canadian government planned to send Stellantis a “default notice” — essentially a warning of a breach of contract — to prevent lawsuits after the company renegotiated its commitments to Brampton’s roughly 3,000 employees.
Stellantis received huge financial aid from the Canadian government to fund vehicle production in the industrial cities of Windsor and Brampton. Now, the government is threatening to withhold funds and claw back money already paid if the automaker doesn’t get Canadian workers back to work making cars in Brampton.
Stellantis was paid $222 million as part of an agreement to restructure its Brampton and Windsor plants, the CBC reported. The Canadian government has threatened to halt payments on remaining loans, totaling C$529 million, that were slated to be used to renovate two factories.
[…]
Stellantis Canada spokesperson Lou Ann Gosselin told the Free Press in a statement, “Stellantis continues to work with the government in the dispute resolution process in accordance with the agreement. We are working toward our shared goal of ensuring a long-term, sustainable future for automotive manufacturing in Canada, including Brampton.”
Stellantis recently announced it would add about 1,500 new jobs at the Windsor plant to build the new gasoline-powered Charger and Chrysler Pacifica. The third shift is scheduled to begin in early 2026, with laid-off employees in Brampton being the first to get the jobs, although it’s worth noting that Windsor is a four-hour drive from Brampton.
Tier 3: Volkswagen may cut investment as funding becomes an issue
Volkswagen ID Buzz – Jonathan Weiss/Shutterstock
Volkswagen is planning to cut back on its ambitious five-year investment plan because it is a bit strapped for cash. Cash flow is expected to be less than $580 million in 2025. Still, it will invest a lot of money into itself—$186 billion, to be exact. Most of the spending will now be targeted at Germany and Europe to strengthen areas where it already does well. That means other regions, such as the United States and China, will have to spend some less. from automotive news:
“The focus is on Germany and Europe – on products, technology, production sites and infrastructure. At the same time, we are funding development in future areas such as batteries, software and autonomous driving,” Blume told the Frankfurter Allgemeine Zeitung newspaper.
Volkswagen Group, which includes the Porsche and Audi brands, has been squeezed by U.S. import tariffs and fierce competition from China. The impact on profits has been most pronounced at Porsche, which sells about half its cars in those two markets and has announced a sharp rollback of its electric-car strategy.
[…]
The carmaker’s supervisory board has delayed an investment plan that was due to be approved in November as the automaker faces a financing gap of around 11 billion euros for investments next year alone, Bild newspaper reported last month, citing company sources.
Even before Volkswagen’s board of management and supervisory board locked in on the planning cycle for 2026 to 2030, Blum confirmed the lower investment figure to the Frankfurter Allgemeine Zeitung, thereby tightening belts in advance.
Volkswagen had previously set aside 180 billion euros for the 2024-28 period, while the 73rd planning round completed this spring set aside 165 billion euros for 2025-29.
[…]
Bloom reiterated the need for tightening at a recent staff meeting in Wolfsburg, saying Volkswagen had strong technology and attractive products but must boost productivity and streamline processes. Behind the scenes, this means eliminating duplicative structures and pushing software development, manufacturing and supply chains back to internationally competitive levels.
The renewed focus on Germany and Europe, while welcoming VW employees in their home countries, may mean Audi’s plans to build a U.S. plant are dead. Earlier this year, Bloom said consideration of the plant was contingent on potentially significant financial support from the U.S. government. Last month, Bild reported that opening an Audi factory in the United States would be difficult because there is simply no money.
Tier 4: China can’t escape sales slump
YD company car dealer. BYD’s economic problems are mainly due to a severe price war in China’s electric vehicle (EV) market. – ChameleonsEye/Shutterstock
Something bad is happening in China. Full-year auto sales fell 8.5% in November, the second consecutive month of decline and the largest decline in 10 months. Until then, buyers no longer feel pressure to buy a new car before government subsidies end.
That’s bad news for the world’s largest car market, which saw sales of 2.24 million vehicles last month. This follows a 0.8% decline in October. From Reuters:
Cui Dongshu, secretary-general of the industry body, said the deeper decline was “abnormal” because sales in the last two months of the year were generally quite strong, but it was reminiscent of the situation 17 years ago.
“Similar anomalies occurred in 2008 when consumption was under pressure,” he added.
Sales of electric vehicles and plug-in hybrid vehicles accounted for 58.9% of total vehicle sales, a record high. In the first 11 months of this year, subsidized car trade-ins for electric vehicles and plug-in hybrids exceeded 11.2 million, official figures show.
Towards the end of the year, reductions in government subsidies are expected to weaken consumer confidence nationwide.
In addition, Cui said that the sharp decline in gasoline vehicle sales last year and the high base were the reasons for the overall sales decline last month, and that full-year sales are expected to increase by 5%.
Car sales are expected to be roughly flat in 2026, when competition in China will become more intense and “the number of new models could hit a record high,” analysts at CMB International said in a report.
To stimulate sales ahead of a halving of purchase taxes on electric cars and plug-in hybrids in 2026, many automakers are also offering subsidies of up to 15,000 yuan ($2,120) for orders placed before the end of the year, which may not be delivered until next year.
China’s rapid economic upward trend may not last long. Concerns about overcapacity and excessive competition forced Beijing to remove electric vehicles from its list of strategic industries in its roadmap for the next five years. This means these companies may face more challenges in the near future.
Although overseas shipments hit a record last month, November marked BYD’s third consecutive month of declining global sales. This year, 91% of the reduced sales target has been achieved. Tesla, on the other hand, actually rose to 73,145 units in November after sales fell to a three-year low of 26,006 units in October.
There is some good news on the export front. Overall, foreign shipments increased 52.4% from 27.7% last month. That’s certainly a good thing, but I’m sure these companies want to be more successful in their home markets.
Back: The people who built Detroit
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On the Radio: Darlene Love – Christmas Day (Baby Please Come Home)
It was my first morning shift in December, which meant I had to start from scratch. Darlene Love’s “Christmas” has long been my favorite song of the holiday season, and if you disagree, keep your garbage opinions to yourself. That being said, it’s Christmas music from now on, so buckle up.
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